7.)The balance sheet and income statement shown below are for Koski Inc. Note that the firm has no amortization charges, it does not lease any assets, none of its debt must be retired during the next 5 years, and the notes payable will be rolled over.

Balance Sheet (Millions of $)	2021
Assets
Cash and securities		$	5,600
Accounts receivable			17,500
Inventories			18,900
Total current assets		$	42,000
Net plant and equipment			28,000
Total assets		$	70,000
Liabilities and Equity
Accounts payable		$	19,648
Accruals			11,052
Notes payable			8,000
Total current liabilities		$	38,700
Long-term bonds			11,000
Total liabilities		$	49,700
Common stock			5,075
Retained earnings			15,225
Total common equity		$	20,300
Total liabilities and equity		$	70,000
Income Statement (Millions of $)	2021
Net sales		$	126,000
Operating costs except depreciation			117,180
Depreciation			2,240
Earnings before interest and taxes (EBIT)		$	6,580
Less interest			1,140
Earnings before taxes (EBT)		$	5,440
Taxes (25%)			1,360
Net income		$	4,080
Other data:
Shares outstanding (millions)			500.00
Common dividends (millions of $)		$1,428.00
Int. rate on notes payable & L-T bonds			6%
Federal plus state income tax rate			25%
Year-end stock price			$97.92

What is the firm's total assets turnover? Do not round your intermediate calculations.

a. 2.47

b. 1.80

c. 3.26

d. 2.69

e. 3.00

2.)

8.)Last year, Stewart-Stern Inc. reported $11,250 of sales, $4,500 of operating costs other than depreciation, and $1,250 of depreciation. The company had $3,500 of bonds outstanding that carry a 6.50% interest rate, and its federal-plus-state income tax rate was 25.00%. During last year, the firm had expenditures on fixed assets and net operating working capital that totaled $2,000. These expenditures were necessary for it to sustain operations and generate future sales and cash flows. This year's data are expected to remain unchanged except for one item, depreciation, which is expected to increase by $1,250. By how much will the depreciation change cause (1) the firm's net income and (2) its free cash flow to change? Note that the company uses the same depreciation for tax and stockholder reporting purposes. Do not round the intermediate calculations.

Net Income

Free Cash Flow

a. -$937.50 $1,250.00

b. -$1,250.00 $0

c. -$312.50 $937.50

d. -$937.50 $312.50

e. -$1,250.00 $312.50

3.)

9.)In 2020, Mays Industries taxable income was -$63,000. In 2021, its taxable income was $110,000.

Its corporate tax rate is 25%. Assume that the company takes full advantage of the Tax Code's carry-forward provision. What is the company's tax liability for 2021?

a. $27,500

b. $43,250

c. $11,750

d. $15,750

e. $0